Debt recovery from the vessel after change of shipowner

09.11.16

The Client, one of the leading ship repair entities in the Black Sea Region, applied to Interlegal due to full non-payment by the customer, shipowner, of the vessel repair been performed and accepted by the customer.

Situation was complicated by the fact that the customer sold the vessel to third persons and failed to notify the Client. After receiving the demand for payment the customer stated that upon the transfer of such ownership rights all requests related to payment for the vessel repair shall be addressed to the new shipowners.

In addition, under general rules provided, inter alia, by the International Convention on Maritime Liens and Mortgages 1993, to which Ukraine accessed in 2002, debt for repair work shall not follow the vessel. In such a way, having sold the vessel to new owners, the former shipowner may avoid responsibility for the debt for repair work. This problem often arises under other debts related to the supply to vessels.

To settle the dispute, the Client applied to Interlegal.

Interlegal lawyers analyzed the terms of the vessel repair contract and the customer’s guarantees provided to the ship repair entity. Situation might have been settled by means of negotiations between the Client, the customer and the new shipowners, following the customer’s additional guarantees. Interlegal lawyers developed legal arguments which served as grounds for such additional guarantees. In addition, the motivated claim was drafted and addressed to the shipowners.

As the result, payment for the vessel repair was made in full, according to the payment schedule agreed by the parties. The vessel was delivered to the new shipowners.